CHINA TELECOM(00728) 第一上海证券·2024-03-27 16:00Investment Rating - The report maintains a "Buy" rating for China Telecom with a target price adjusted to HKD 5.2, reflecting a 27% upside potential from the current stock price of HKD 4.1 [2][3]. Core Views - China Telecom has entered a high-quality development phase focused on improving efficiency and returns, with service revenue expected to maintain good growth over the next three years. The reduction in capital expenditure is anticipated to enhance operating cash flow [2][3]. - The company emphasizes precise cost management and structural optimization, projecting profit growth to outpace revenue growth [2][3]. Summary by Sections Financial Performance - In 2023, China Telecom achieved revenue of CNY 513.6 billion (YoY +6.7%), with service revenue at CNY 465 billion (YoY +6.9%). EBITDA reached CNY 136.8 billion (YoY +5.0%), and net profit was CNY 30.4 billion (YoY +10.3%) [1][3]. - The company plans to increase its dividend payout ratio to over 75% over the next three years, with a dividend of CNY 0.23 per share in 2023 (YoY +19%) [1][3]. Business Segments - Mobile communication service revenue was CNY 195.7 billion (YoY +2.4%), with a mobile ARPU of CNY 45.4 (YoY +0.4%). The number of mobile users reached 408 million, with a net increase of 16.59 million users [1][3]. - The digital industry segment saw revenue of CNY 138.9 billion (YoY +17.9%), with Tianyi Cloud revenue at CNY 97.2 billion (YoY +67.9%), indicating rapid growth and a focus on upgrading to intelligent cloud services [1][3]. Future Outlook - The report anticipates that the capital expenditure for 2024 will be CNY 96 billion, accounting for less than 20% of service revenue, a decrease of 2.9% from the previous year [1][3]. - The company is expected to focus more on the quality of revenue growth in its cloud services, transitioning into a phase of high-quality development [1][2].